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Nigerian carriers spend over N100b on aviation fuel in five years
- Carriers meet over skyrocketing fuel cost
There are indications that scheduled domestic airlines in the country may have spent over N100 billion on aviation fuel in the last five years. This is coming as airline operators are meeting to seek solution to escalating price of aviation fuel, otherwise known as Jet A1.
Over 40 per cent of these cost could have been said if Jet A1 is refined in the country and distributed directly with the attendant long chain of middle men.
The Managing Director of Medview Airlines, Alhaji Muneer Bankole at an interactive section with the media at the weekend disclosed that his carrier procured N22 b worth of aviation fuel in the past five years, stressing that majority of its stock come from Forte Oil.
He stated that aviation now sales for N220 per litre, adding that it costs between N250 and N260 in Yola, Maiduguri while air fares remain static for many years.
Arik and Air Peace which domestic operations doubled that of Medview may have spent more on fuel because while Arik operated London New York, London and regional operations, Air Peace became the biggest domestic airline after Arik was hit by problems leading to the suspension of its international services.
Medview still operates virtually all its regional and international flight services to Jeddah, London and Dubai. It plans to resume Dubai route that it suspended due to ferrying its airplane overseas for maintenance.
Other schedule airline operators that have spent considerable sum of money on aviation fuel are Overland Airways, Dana, First Nation and Aero Contractors. They are however worried over the rising fuel cost which they said has hampered their operations.
Bankole said, “We had our meeting today and one of the things we discussed was fuel situation in Nigeria. We cannot continue this way. This country is blessed. If you go to the market, you are the master of the market and the marketers sometimes say they don’t get foreign exchange (FOREX). They import fuel. Three people are involved; the man who gets the licence to bring in the fuel by whichever means he brings it in. Another owner who has a dump, who receives the fuel to keep for the man, he has his own value”.
“Don’t forget the other chains including the one on the sea and on the roads. When the fuel lands; they keep it somewhere before it finally goes to the people who need it. Because of security situation, they don’t go to Maiduguri. Fuel there goes for between N250 and N270”.
Investigation by New Telegraph shows that aviation fuel costs more in Nigeria and other oil producing countries than their counterparts that do not produce oil.
For instance, in Nigeria, despite the stability in the lifting of aviation fuel across the country and the deregulation of the commodity, JET A1 has hit an all-time high of N220 per litre.
The skyrocketing price of JETA1 in Nigeria has added more to the pains of airlines, which use 30 per cent of their revenues for fuelling aircraft.
Another airline owner who spoke on condition of anonymity confirmed that in Lagos, aviation fuel, otherwise known as JET A1, sells for over N200 per litre, while it costs more in Abuja and Kano.
Aviation fuel is central to the operations of an airline, as it constitutes between 35-40 per cent of an airline’s cost. The price of the commodity – laden with taxes – in the West African sub-region, is the highest in Africa.
While the specialised fuel is sold for about $2.30 cents per gallon in Nigeria, $2.30 in Benin and $1.94 cents per gallon in Cameroon, it is sold for close to $3.14 cents in Ghana, which also produces oil. In Luanda, Angola (also an oil producing country), it costs $3.75 per gallon; Libreville $2.05 per gallon; Khartoum, Sudan $2.44 per gallon.
It is only Equatorial Guinea that sells JET A1 for $0.46. Jet fuel prices in some African capitals are double the global average and it is posing a threat to its aviation sector development.
The high cost of jet fuel in Africa compared to other regions due to distribution inefficiencies and infrastructure constraints, has held back the development of airlines and fare reduction.
Apart from the issues of highly priced jet fuel, Africa’s jet fuel shortfall is expected to triple from 1.8 million mt in 2013 to around 5.2 million mt by 2025. As a result of the high fuel price, ticket prices are relatively high. If the fuel price comes down and costs of operations reduce, airlines are likely to bring down their fares.
Today, fuel prices globally average per 1.3 dollar. In Africa, it ranges between $2 and $3.77. In some places, more than twice what it is globally.
Vice-President for Africa, International Air Transport Association (IATA), Raphael Kuuchi, recently told our correspondent said on the average, they notice that fuel price is 21 per cent more expensive in Africa than the world average. “In addition to that, we brought these taxes together.
Africa is not a rich continent and we ask, why must we be paying the most? If you look at the high fuel taxes in Africa, the victims are actually oil producers.” He lamented that in most of the oil producing countries; aviation fuel is mostly expensive, adding that it is baffling.
In other countries, he noted that the governments try to build new airports and make a choice to raise the tax on existing passengers to raise revenue to pay airport. However, he explained that IATA’s question has always been, “Why should a passenger flying today pay for an airport tomorrow, which he might never use?”
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